TDS query - Purchase of Flat from NRI

TDS 181 views 4 replies

bkp

self-employed

99 Points Joined March 2012

We (I and my wife as joint owner) intend to purchase a residential flat from an NRI. All the payments are from my account, although wife's name will be appearing as Joint owner

1. The seller is not availing of the lower rate of TDS possible (in view of the lengthy process), and says he will claim refund on any excess tax deducted when he files his returns.

2. Hence, TDS will be on full Sale Value, which is approx. Rs 1.5 Cr.

3. I need clarity on

(a) the rate at which TDS needs to be deducted - Have been receiving conflicting figures of 22.88% and 23.92%.

(b) Is it in order for the TDS to be deducted only by me, as all payments are from my account? (If both have to deduct, how is the breakup decided, as all payments are from my account?)

Your advise highly appreciated.

Replies (4)

JGM

Knowledge Sharer

443 Points Joined September 2021

Since the sale is made by NRI, you need to deduct tax under section 195 of the Income-tax Act, 1961 (the Act). The rate would depend upon whether the asset is a long term capital asset or short term capital asset. Assuming that the property is to be considered as long term capital asset, please find my response hereunder:

(a) The difference in rate is attributable to surcharge rate. The surcharge slab rate is as under:

Between INR 50 lakhs to INR 1 Crore - 10%

Between INR 1 crore to INR 2 crore - 15%

Between INR 2 crore to INR 5 crore - 25%

Above INR 5 Crore - 37%

(b) Since you will be making full payment, TDS should be done by you. Please note that you need to deduct tax under section 195 of the Act

(c) The taxes so deducted should be deposited using Challan No. 280. The timeline for depositing the tax is within 7 days from end of the month in which the tax is deductible. If the tax is deductible in the month of March, you get time till 30 April for depositing the taxes. Once the TDS is deposited, you need to file eTDS return in Form 27Q. Also, you will need Form 15CA and Form 15CB (a CA certificate) for remitting the money abroad.

Please note that under section 195 of the Act, the TDS is to be done on the income chargeable to tax in India. In absence of cost details you will need to deduct tax on the entire amount. You may wish to consult a Chartered Accountant who can guide you with further nitty gritties associated with such transaction

bkp

self-employed

99 Points Joined March 2012

JGM Sir, Thank you so much for the detailed and very clear reply.

The only point is that we would be depositing the funds in the NRI's SB account here in India, and I would not be required to remit the money abroad.

While I will be consulting my CA (as advised by you), would I still be required to fill in the Forms 15CA and 15CB mentioned by you?

Thank you again for your excellent advise.

JGM

Knowledge Sharer

443 Points Joined September 2021

Considering that there will not be any foreign remittance involved, you may not be required to submit Form 15CA and 15CB. However, certain banks do insists for these Forms. You may wish to check with the bankers for the same.